Go to http://ExpertOptionTrading.com/videos for more free videos on virtual options trading. The reason for that is just like any other business. Any other business, if they had the opportunity to buy stock... Let's say they had a gift store. If they had an opportunity to buy stock to put in their store at a very low cost, but this opportunity is only available for a few days, because there are other people who are interested in this stock - but you could get it very cheaply, maybe 50% cheaper than you could normally buy it - you would need the capital available to make that purchase, as the opportunity became available. That's what we need to think about in this business. When our prices start to run up toward our breakeven points, in our portfolio, we need to make changes to our business, in our portfolio, so that we have the capital available to take advantage of those opportunities. Many times, a position that runs up against our breakeven points is an opportunity to add to our current positions. It's a smart allocation of capital, to take advantage of those opportunities. Not only that, but you could think of it in this way too. Not only are they opportunities, but also, it is an indication that our trade is broken. If you owned a restaurant, and you had a deep-fry cooker, and it broke, and your business really depended on that piece of equipment - well, you would have to have the capital available, to go out and purchase that piece of equipment. It's very important that you have that piece of equipment, in order to continue running your business. If you couldn't purchase it; if you didn't have the capital to purchase that piece of equipment, it is possible that you could go out of business. It's the same thing in this business. If you have the capital available to make adjustments to your position when they run up against your breakeven, that gives you an opportunity to stay in business. If you don't have the capital, you may have to close out the position at a small loss, and just call it a day. That's why we don't suggest using all of your capital to initiate positions, when we begin building our portfolio. We start our portfolio out on some basic positions, but we always make sure that we have capital available. Working capital, in any business, is extremely important. We have the working capital to take advantage, to fix broken trades, as necessary. The fourth risk that I want to talk about is overtrading, or over-adjusting. One of the principles of the business, and one of the truths of the market, is that prices fluctuate. Of course, we never know exactly how prices will fluctuate, but we know that they do fluctuate. If we take a look at a current chart, of the Dow Jones Industrial Average, you'll see that yesterday, we had an extremely large run up in prices. In fact, they were up almost $200, yesterday. Today, they were up another $115. Now, they have backed down quite a bit. In fact, they backed down to the point that it is below this 200-day moving average, which we had kind of determined to be somewhat of a resistance point, as well as the 13,100 level. Technical analysis is interesting, in that it's fairly simple. You have support and resistance points. You have support. You have resistance. You have resistance. You have support. That is pretty much all you need to know, as far as technical analysis goes, for the type of business that we run. That's pretty much it. Prices do tend to fluctuate. Sometimes they go up. Sometimes they go sideways. Sometimes they go down. Adjusting positions becomes an art of knowing when exactly to make those adjustments. I would say that once you get to the point where, anytime between your breakeven and one of your peaks of your profit picture - maybe the final 1/3 or even 1/4 on each side of your profit picture, just before your breakeven, would be an appropriate time to make an adjustment. For more videos on virtual options trading be sure to check out our channel: http://www.youtube.com/user/howtotradeoptions To learn more about the Expert Option Trading course go to: http://ExpertOptionTrading.com Additional Tags ================ vertical spreads, options greeks, what is options trading, option volatility, option spreads, options volatility, how to trade in options, option strategies, index options, equity options, virtual trading, options spreads, options trading tutorial, option trading strategy, options trading course, how to trade stock options, options trading systems, options training, learning options, learn to trade options, option trading tutorial, options trading strategy, option trading course, option trading systems, options trading basics, option trading basics, option trading system, options trading courses, options trading training, trade options, what is a stock option, options strategies
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